KOYA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) Appeal is filed against the order of the Tribunal holding that appellant is liable to pay interest under Section 220(2) of the Income Tax Act for the entire period of default commencing from the date of service of original demand till payment after appeal was disposed of by the Tribunal.

(2.) We have heard counsel for the appellant assessee and standing counsel for the respondent.

(3.) The assessment pertains to the year 1994-95. As against a total demand of Rs. 20,31,824/-, assessee paid only Rs. 9,76,211/- leaving a balance unpaid tax of Rs. 10,55,613/-. The appeal filed by the assessee against assessment was successful and consequent upon the appellate order, assessment was revised vide Annexure-B order wherein assessee is found to be eligible for refund of Rs. 3,5 6,010/- being excess tax paid by the assessee. The assessee was granted a total refund of Rs. 3,10,836/-, which is computed after adding default interest for some period under Section 220(2) and after reducing the interest entitlement for the assessee under Section 244A of the I.T.Act. However, on departmental appeal, the appellate order was vacated and the original assessment and the original demand were restored. Consequently, revised order was issued vide Ext.P7 by which the department has charged interest under Section 220(2) of the I.T. Act for the entire period of default on the sustained demand, that is, from the date of the original demand till date of re-computation of liability. Assessee did not succeed in the two level appeals against levy of interest before the C.I.T. (AppeaIs) and before the Tribunal. Consequently, this appeal is filed against the order of the Tribunal sustaining the demand of interest.